Shri Gautam Sharma, JODHPUR V. DCIT, Central Circle-2, JODHPUR

ITA 120/JODH/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6711 (ITAT-JODHPUR)
• Duration Of Justice: 1 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 04-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHIMANYU YADAV J DHK
• Keywords: Business expenditure; Revenue expenditure; Capital expenditure
• Section: 40A(3); 143(3); 251; 191; 207; 11

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JODHPUR BENCH (SMC), JODHPUR JH JESK LH-'KEKZ] YS[KK LNL; DS LE{K BEFORE : SHRI RAMESH C.SHARMA, ACCOUNTANT MEMBER VK;DJ VIHY LA -@ ITA NO. 120/JODH/2019 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2012-13 SHRI GAUTAM SHARMA 221-222, SHYAM NAGAR, SCHEME, PALI LINK ROAD, JODHPUR CUKE VS. THE DCIT CENTRAL CIRCLE JODHPUR LFKK;H YS[KK LA -@THVKBZVKJ LA -@ PAN/GIR NO .: AWDPS 1276 K VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI AMIT KOTHARI, CA JKTLO DH VKSJ LS@ REVENUE BY: SHRI ABHIMANYU YADAV, JCIT-DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 29/06/2020 ?KKS 'K.KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 04/09/2020 VKNS'K@ ORDER PER RAMESH C. SHARMA, AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A)-2, UDAIPUR DATED 12-02-2019 FOR THE ASSESSMENT YEAR 2012-13, IN THE MATTER OF ORDER PASSED U/S 147/ R.W.S. 143(3) OF THE INCOME TAX ACT, 1961. 2.1 DUE TO PREVAILING COVID-19 PANDEMIC CONDITION, THE HEARING OF THE APPEAL IS CONCLUDED THROUGH VIDEO CONFERENCE. THE ONLY GRIEVANCE OF THE ASSESSEE RELATES TO DISALLOWANCE OF RS.40.57 LACS PAID TOWARDS PURCHASE OF LAND, BY INVOKING THE PROVISIONS OF SECTION 40A(3) OF THE ACT. ITA 120/JODH/2019 SHRI GAUTAM SHARMA VS DCIT, CENTRAL CIRCLE-2, JODHPUR 2 2.2 RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PURCHASE & SALE OF LAND AND CONSTRUCTION OF BUILDINGS. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD PURCHASED LAND FOR RS.42,59,960/- AND HAD MADE PAYMENT OF RS.40,57,000/- IN CASH TO THE FARMERS FOR PURCHASE OF THE SAID AGRICULTURE LAND. IN THE ASSESSMENT ORDER, THE AO OBSERVED THAT THE ASSESSEE SHOWED PURCHASE OF AGRICULTURAL LAND OF RS.42,59,960/- IN THE TRADING ACCOUNT FOR THE YEAR ENDED 31-03-2012. THE PURCHASE WAS MADE FROM SHRI BARGAT KHAN. AS PER SALE DEED DATED 04-04-2011 AS WELL AS THE LEDGER COPY OF PURCHASE ACCOUNT, THE ASSESSEE MADE PAYMENT OF RS.40,57,000/- TOWARDS PURCHASE OF THE SAID AGRICULTURAL LAND IN CASH. IN VIEW OF THE FACT THAT THE ASSESSEE WAS ENGAGED IN REAL ESTATE BUSINESS, THE AO REQUIRED THE ASSESSEE TO EXPLAIN AS TO WHY A DISALLOWANCE OF RS.40,57,000/- MAY NOT BE MADE U/S 40A(3). 2.3 IT WAS SUBMITTED BEFORE THE AO THAT AS PER ASSESSEES NATURE OF BUSINESS/TRADE, PAYMENT TOWARDS CONSIDERATION FOR AGRICULTURAL LAND ARE NORMALLY REQUIRED TO BE MADE IN CASH ONLY. THE FARMERS HAVE LARGE FAMILIES AND MOST OF THEM ARE NOT VERY LITERATE AND STILL HAVE A COMPLEX IN TRANSACTING THROUGH BANKING CHANNELS. SOMETIMES IT IS ALSO VERY DIFFICULT TO CONVINCE TO ALL THE MEMBERS OF THE FAMILY TO AGREE UNANIMOUSLY TO SELL THEIR LAND. MOST OF THE TIME, THE FAMILY MEMBERS ARE AVAILABLE EITHER IN THE LATE NIGHT OR EARLY MORNING AND AT THE TIME IT IS ITA 120/JODH/2019 SHRI GAUTAM SHARMA VS DCIT, CENTRAL CIRCLE-2, JODHPUR 3 NOT POSSIBLE TO MAKE PAYMENT THROUGH BANKING CHANNEL. THE AO, HOWEVER, OBSERVED THAT THE ASSESSEE HAD NOT DISPUTED THAT IT WAS ENGAGED IN REAL ESTATE BUSINESS OR THAT PURCHASE OF LAND HAD BEEN MADE IN CASH. THE AO NOTED THAT THE CASE DID NOT FALL UNDER ANY OF THE EXCEPTION CLAUSES PROVIDED IN RULE 6DD. THE AO ALSO NOTED THAT PROVISION OF SECTION 40A(3) APPLICABLE TO EXPENDITURE FOR STOCK IN TRADE AND RAW MATERIALS AND THE WORD EXPENDITURE INCLUDED ALL OUTGOINGS INCLUDING EXPENDITURE FOR PURCHASING STOCK IN TRADE AND RAW MATERIAL. WITH THESE OBSERVATIONS, THE AO MADE A DISALLOWANCE OF RS.40,57,000/- U/S 40A(3) OF THE INCOME TAX ACT, 1961. 2.4 BY IMPUGNED ORDER, THE LD.CIT(A) CONFIRMED THE ACTION OF THE AO AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEFORE THIS BENCH. 2.5 IT WAS ARGUED BY THE LD.AR OF THE ASSESSEE THAT THE SOURCE OF PAYMENT IS ALSO NOT IN DISPUTE AND THE GENUINENESS OF TRANSACTION HAS ALSO NOT BEEN DISPUTED AND PROVISIONS OF SECTION 40A(3) CANNOT BE INVOKED IN SUCH CIRCUMSTANCES. RELIANCE WAS PLACED ON THE CBDT CIRCULAR NO. 250[F.NO 26/1/79-IT(A-II)] DATED 11-01- 1979 IN WHICH IT WAS CLARIFIED THAT UNDER RULE 6DD THE PROVISION OF SECTION 40A(3) WILL NOT BE APPLIED BY THE INCOME TAX OFFICER WHERE HE IS SATISFIED THAT THE PAYMENT COULD NOT BE MADE BY THE CROSSED BANK CHEQUE OR DRAFT DUE TO ITA 120/JODH/2019 SHRI GAUTAM SHARMA VS DCIT, CENTRAL CIRCLE-2, JODHPUR 4 EXCEPTIONAL OR UNAVOIDABLE CIRCUMSTANCES AND THE ASSESSEE FURNISHES EVIDENCE AS TO THE GENUINENESS OF THE PAYMENT AND THE IDENTITY OF THE PAYEE. 2.6 RELIANCE WAS PLACED ON THE DECISION OF ATTAR SINGH GURMUKH SING VS ITO [1991] 191 ITR 667 (SC) WHEREIN THE HONBLE SUPREME COURT WHILE UPHOLDING THE VALIDITY OF SUCH PROVISIONS HAD HELD THAT THE TERMS OF SECTION 40A(3) ARE NOT ABSOLUTE AND CONSIDERATIONS OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS ARE NOT EXCLUDED. GENUINE AND BONA FIDE TRANSACTIONS ARE NOT TAKEN OUT OF THE SWEEP OF THE SECTION. 2.7 AS PER LD. AR OF THE ASSESSEE IN TERMS OF NATURE OF BUSINESS OF THE ASSESSEE'S TRADE, THE PAYMENTS TOWARDS CONSIDERATIONS OF AGRICULTURAL LAND IS NORMALLY REQUIRED TO BE MADE IN CASH ONLY. THE FARMERS HAVE LARGE FAMILIES AND MOST OF THEM ARE NOT VERY LITERATE AND STILL THEY HAVE A COMPLEX IN HAVING TRANSACTION THROUGH BANKING CHANNELS. THE AGRICULTURAL LANDS PURCHASED ARE REQUIRED TO BE CONVERTED INTO THE RESIDENTIAL PLOTS AND ONLY THEREAFTER, THE SAME BECOMES TRADABLE COMMODITY. UNTIL THE AGRICULTURAL LAND IS CONVERTED INTO URBAN LAND AFTER OBTAINING PERMISSION U/S 90B FROM THE LOCAL AUTHORITIES, THE AGRICULTURAL LAND CANNOT PARTAKE THE CHARACTER OF STOCK IN TRADE. THE PAYMENT MADE TOWARDS PURCHASE OF AGRICULTURAL LAND IS AN ASSET UNTIL THE SAME IS CONVERTED. THE UNCONVERTED AGRICULTURAL LAND ITA 120/JODH/2019 SHRI GAUTAM SHARMA VS DCIT, CENTRAL CIRCLE-2, JODHPUR 5 CANNOT BE REGARDED AS A REVENUE EXPENDITURE BUT THE SAME WILL HAVE TO BE SHOWN AS AN ASSET IN THE BALANCE SHEET. 2.8 IT WAS VEHEMENTLY ARGUED BY THE LD. AR THAT THE AMOUNT PAID TOWARDS PURCHASES OF THE LAND CANNOT BE REGARDED AS AN EXPENDITURE REFERRED TO IN SECTION 40A(3) AND ATTENTION OF THE BENCH WAS INVITED TOWARDS THE DECISION OF ITAT DELHI BENCH IN THE CASE OF KANSHIRAM MADAN LAL VS ITO (1983) 3 ITD (DEL.) 290 IN WHICH IT WAS HELD THAT SECTION 40A(3) IS NOT ATTRACTED IN THE CASE OF CAPITAL EXPENDITURE. 2.9 AS PER LD. AR, THE SAID SECOND PROVISO ALSO RECOGNIZES 'OTHER RELEVANT FACTORS'. THE 'OTHER RELEVANT FACTORS' WILL SURELY INCLUDE CASES WHERE IT IS IMPRACTICABLE OR IMPOSSIBLE TO MAKE CASH PAYMENTS RELATING TO PURCHASE / SALE OF LAND OR OTHER IMMOVABLE PROPERTIES. THEREFORE, ALL THE JUDGMENTS ON OLD RULE 6DD(J) PRIOR TO ITS OMISSION WHERE CASH PAYMENT WERE MADE ON ACCOUNT OF IMPRACTICABILITY OR IMPOSSIBILITY OF PAYMENT BY CHEQUES AND OTHER COMPELLING REASONS STILL CONTINUE TO BE A VALID JUSTIFICATION IN VIEW OF THE EXEMPTION SO CARVED OUT IN, SECOND PROVISO TO SECTION 40A(3). RELIANCE WAS PLACED ON FOLLOWING DECISIONS: A. CIT V/S CHAUDHARY & CO. (1996) 217 ITR (ALL.) 431. B. CIT V/S UNION AGENCIES (1987) 166 ITR 529 (DELHI). ITA 120/JODH/2019 SHRI GAUTAM SHARMA VS DCIT, CENTRAL CIRCLE-2, JODHPUR 6 C. KANTILAI PURSHOTTAM & CO. V/S CIT (1985) 155 ITR 519 (RAJ.). D. THE JARIAMBHUMI V/S CIT (1997) 225 ITR 517 (GAU.). E. CIT V/S BRUGMOHAN SINGH & CO. (1994) 209 ITR 753 (P&H). F. CIT V/S A.D. JAYAVEERAPANDIA NADAR & SONS (2007) 207 CTR (MAD.) 428. G. SMT. HARSHILA CHORDIA V/S ITO (2008) 298 ITR 349 (RAJ.) H. MAHENDER SINGH & PART V/S DCIT (2006) 104 TTJ (DEL.) 590. I. JITU BUILDERS P. LTD. V/S ACIT (2009) 125 TTJ (AHD.) (TM) 721. J. DEBJYOTI DUTTA V. ITO (2020) 34 NYP TTJ 26 (CTK) K. AAMBY VALLEY LTD. VS. ACIT (2019) 198 TTJ 662 (DEL) AS PER THE LD. AR, IN THE INSTANT THE PROVISION OF SECTION 40A(3) IS NOT APPLICABLE IN VIEW OF THE VARIOUS CLAUSES CONTAINED IN RULE 6DD. RELIANCE WAS PLACED ON THE FOLLOWING DECISION IN THIS REGARD:- A. SHREE SALASAR OVERSEAS (P) LTD. V/S DCIT (2012) 66 DTR 9 (JP) (TRIB.) B.PACK INDIA V/S ACIT (2010) 38 ITD (JP)(TRIB) 1. C.CIT V/S CPL TANNERY. (2009) 318 ITR 179(CAL.). 2.10 ON THE OTHER HAND, THE LD. DR CONTENDED THAT SINCE THE ASSESSEE WAS ENGAGED IN PURCHASE AND SALE OF LAND, THE LAND SO PURCHASED CONSTITUTES ITS STOCK IN TRADE FOR WHICH PAYMENT IS REQUIRED IS TO BE MADE ONLY BY ACCOUNT PAYEE CHEQUE. SINCE THE ASSESSEE HAS MADE CASH PAYMENT, THEREFORE, THE AO WAS JUSTIFIED IN MAKING ITA 120/JODH/2019 SHRI GAUTAM SHARMA VS DCIT, CENTRAL CIRCLE-2, JODHPUR 7 DISALLOWANCE U/S 40A(3) OF THE ACT. FURTHER, THE LD. DR SUPPORTED THE ORDERS PASSED BY THE LOWER AUTHORITIES. 2.11 I HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. I HAVE ALSO DELIBERATED ON THE JUDICIAL PRONOUNCEMENTS AS REFERRED BY THE LOWER AUTHORITIES IN THEIR RESPECTIVE ORDERS IN SUPPORT OF THEIR CONCLUSION FOR INVOKING THE PROVISIONS OF SECTION 40A(3) OF THE ACT, AS WELL AS THE CASE LAWS CITED BY THE LD. AR AND LD. DR DURING THE COURSE OF HEARING BEFORE ME IN THE CONTEXT OF FACTUAL MATRIX OF THE CASE. FROM THE RECORD, I FOUND THAT THE ASSESSEE WAS ENGAGED IN PURCHASE & SALE OF LAND AND CONSTRUCTION OF BUILDINGS. DURING THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE HAD PURCHASED AGRICULTURAL LAND FOR RS.42,59,960/- AND MADE CASH PAYMENT OF RS.40,57,000/- TO THE FARMERS FOR PURCHASE OF SAID AGRICULTURAL LAND. I FOUND THAT SOURCE OF PAYMENT IS NOT IN DISPUTE AND THE GENUINENESS OF THE TRANSACTION HAS ALSO NOT BEEN DISPUTED BY THE REVENUE AUTHORITY. IN THE NATURE OF BUSINESS OF ASSESSEES TRADE, THE PAYMENT TOWARDS CONSIDERATION OF AGRICULTURAL LAND IS NORMALLY REQUIRED TO BE MADE IN CASH ONLY. THE FARMERS INSIST FOR MAKING CASH PAYMENT AS THEY ARE NOT VERY MUCH LITERATE. NO DOUBT, THE PAYMENT FOR PURCHASE OF AGRICULTURAL LAND CONSTITUTE BUSINESS EXPENDITURE WHICH ATTRACTS THE PROVISIONS OF SECTION 40A(3) OF THE ACT, HOWEVER, WHERE EXCEPTIONAL AND UNAVOIDABLE CIRCUMSTANCES EXISTS AND IDENTITY OF SELLER OF ITA 120/JODH/2019 SHRI GAUTAM SHARMA VS DCIT, CENTRAL CIRCLE-2, JODHPUR 8 LAND AND GENUINENESS OF THE TRANSACTION IS FULLY ESTABLISHED AND NOT DISPUTED BY THE REVENUE, NO DISALLOWANCE IS WARRANTED. FROM THE RECORD, I FOUND THAT ON THE DATE OF ENTERING INTO TRANSACTION OF PURCHASE OF LAND, THE ASSESSEE WAS HAVING SUFFICIENT CASH BALANCE WHICH PROVES THE SOURCE OF PAYMENT. IT CLEARLY ESTABLISHES THAT THE ASSESSEE WAS HAVING SUFFICIENT CASH BALANCE AND ONLY AT THE INSISTENCE OF SELLERS OF AGRICULTURAL LAND, THE ASSESSEE HAD MADE CASH PAYMENTS TO THEM. THIS MAKES OUT A CASE OF ASSESSEES BUSINESS EXPEDIENCY UNDER WHICH HE HAS TO MAKE PAYMENT IN CASH AND IN THE ABSENCE OF WHICH, THE TRANSACTION COULD NOT BE COMPLETED. IN THE INSTANT CASE, IT IS NOT THE CASE OF REVENUE EITHER THAT UNACCOUNTED OR UNDISCLOSED INCOME OF THE ASSESSEE HAS BEEN UTILISED IN MAKING CASH PAYMENT. THE INTENT AND PURPOSE FOR WHICH SECTION 40A(3) HAS BEEN BROUGHT ON THE STATUTE BOOK HAS BEEN CLEARLY SATISFIED IN THE INSTANT CASE. THEREFORE, BEING A CASE OF GENUINE BUSINESS TRANSACTION, NO DISALLOWANCE IS CALLED FOR BY INVOKING THE PROVISIONS OF SECTION 40A(3) OF THE ACT. EVEN AFTER AMENDMENT OF SECTION 40A(3) AND RULE 6DD, GIVEN THAT THERE HAS BEEN NO CHANGE IN THE PROVISIONS OF SECTION 40A(3) INSOFAR AS CONSIDERATION OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS ARE CONCERNED, THE SAME CONTINUES TO BE RELEVANT FACTORS WHICH NEEDS TO BE CONSIDERED AND TAKEN INTO ACCOUNT WHILE DETERMINING THE EXCEPTIONS TO THE DISALLOWANCE AS CONTEMPLATED U/S 40A(3) OF THE ACT SO LONG AS THE INTENTION OF THE LEGISLATURE IS NOT VIOLATED. AS PER ITA 120/JODH/2019 SHRI GAUTAM SHARMA VS DCIT, CENTRAL CIRCLE-2, JODHPUR 9 MY CONSIDERED VIEW, IT CANNOT BE BELIEVED THAT BY VIRTUE OF AMENDMENTS, THE LEGAL PROPOSITION SO LAID DOWN BY HONBLE SUPREME COURT REGARDING CONSIDERATION OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS HAS BEEN DILUTED IN ANY WAY. AT THE SAME, RULE 6DD AS AMENDED ARE NOT EXHAUSTIVE ENOUGH AND WHICH VISUALIZES ALL KINDS AND NATURE OF BUSINESS EXPEDIENCY IN ALL POSSIBLE SITUATION AND IT IS FOR THE APPROPRIATE AUTHORITY TO EXAMINE AND PROVIDE FOR A MECHANISM AS ORIGINALLY ENVISAGED WHICH PROVIDES FOR EXCEPTIONAL OR UNAVOIDABLE CIRCUMSTANCES TO THE SATISFACTION OF THE AO WHEREBY GENUINE BUSINESS EXPENDITURE SHOULD NOT SUFFER DISALLOWANCE. FURTHERMORE, THE COURTS HAVE HELD FROM TIME TO TIME THAT THE RULES MUST BE INTERPRETED IN A MANNER SO AS TO ADVANCE AND NOT TO FRUSTRATE THE OBJECT OF THE LEGISLATURE. THE INTENTION OF THE LEGISLATURE IS MANIFESTLY CLEAR AND WHICH IS TO CURB THE CHANCES AND OPPORTUNITIES TO USE OR CREATE BLACK MONEY AND TO ASCERTAIN WHETHER THE PAYMENT WAS GENUINE OR WHETHER IT WAS OUT OF THE INCOME FROM DISCLOSED SOURCES. PROVISIONS OF SECTION 40A(3) OF THE ACT CONTINUES TO PROVIDE THAT NO DISALLOWANCE CAN BE MADE IN SUCH CASES AND UNDER SUCH CIRCUMSTANCES AS MAY BE PRESCRIBED HAVING REGARD TO THE NATURE AND EXTENT OF THE BANKING FACILITIES AVAILABLE, CONSIDERATION OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS. GIVEN THAT THERE HAS BEEN NO CHANGE IN THE PROVISION OF SECTION 40A(3) INSOFAR AS CONSIDERATION OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS ARE CONCERNED, THE ITA 120/JODH/2019 SHRI GAUTAM SHARMA VS DCIT, CENTRAL CIRCLE-2, JODHPUR 10 SAME CONTINUES TO BE RELEVANT FACTORS WHICH NEEDS TO BE CONSIDERED AND TAKEN INTO ACCOUNT WHILE DETERMINING THE EXCEPTIONS TO THE DISALLOWANCE AS CONTEMPLATED U/S 40A(3) SO LONG AS THE INTENTION OF THE LEGISLATURE IS NOT VIOLATED. FROM THE RECORD, I FOUND THAT DURING THE COURSE OF ASSESSMENT, THE ASSESSEE HAS SUBMITTED THE COPY OF SALE DEED WHICH CONTAINS NAME OF THE SELLER, DATE OF SALE DEED EXECUTED, KHASRA NUMBER WHERE AGRICULTURAL LAND IS SITUATED, PURCHASE VALUE, STAMP DUTY, COURT FEE AND MODE OF PAYMENT. THUS SO FAR AS THE IDENTITY OF THE PERSON FROM WHOM PURCHASE HAS BEEN MADE AND THE GENUINENESS OF THE TRANSACTIONS OF THE PURCHASE AND PAYMENT IN CASH IS CONCERNED, THE SAME IS EVIDENCED FROM THE REGISTERED SALE DEED AND THERE IS NO DISPUTE WHICH HAS BEEN RAISED BY THE REVENUE NEITHER DURING ASSESSMENT PROCEEDINGS OR BEFORE THE APPELLATE PROCEEDINGS BEFORE LD. CIT(A) OR ITAT THE IDENTITY OF THE SELLER OF AGRICULTURAL LAND AND GENUINENESS OF THE TRANSACTION IS, THEREFORE, FULLY ESTABLISHED IN THE INSTANT CASE. AS PER COPY OF CASH BOOK AND BANK STATEMENT, I FOUND THAT THE ASSESSEE WAS HAVING SUFFICIENT CASH BALANCE, OUT OF WHICH ALLEGED PAYMENT HAS BEEN MADE. THUS IT IS CLEAR THAT THE ASSESSEE WAS HAVING SUFFICIENT BALANCE AND ONLY AT THE INSISTENCE OF THE SELLERS OF AGRICULTURAL LAND, THE ASSESSEE HAS MADE CASH PAYMENT TO THE THEM. THIS MAKES OUT A CASE THAT THE ASSESSEE HAS BUSINESS EXPEDIENCY UNDER WHICH HE HAS TO MAKE PAYMENT IN CASH AND IN THE ABSENCE OF WHICH TRANSACTION COULD NOT BE COMPLETED. ITA 120/JODH/2019 SHRI GAUTAM SHARMA VS DCIT, CENTRAL CIRCLE-2, JODHPUR 11 THE SECOND PROVISO TO SECTION 40A(3) REFERS TO THE NATURE AND EXTENT OF BANKING FACILITY, CONSIDERATION OF BUSINES S EXPEDIENCY AND OTHER RELEVANT FACTORS WHICH MEANS THAT THE OBJECT OF THE LEGISLATURE IS NOT TO MAKE DISALLOWANCE OF CASH PAYMENTS WHICH HAVE TO BE COMPULSORY MADE BY THE ASSESSEE ON ACCOUNT OF BUSINES S EXPEDIENCY. FURTHER, THE SOURCE OF CASH PAYMENTS IS CLEARLY IDENTIFIABLE FROM THE ASSESSEE' S BOOKS OF ACCOUNTS AND THE SAID DETAILS WERE SUBMITTED BEFORE THE LOWER AUTHORITIES AND HAVE NOT BEEN DISPUTED BY THEM. IT IS NOT THE CASE OF THE REVENUE EITHER THAT UNACCOUNTED OR UNDISCLOSED INCOME OF THE ASSESSEE HAS BEEN UTILISED IN MAKING THE CASH PAYMENTS. THE GENUINENES S OF THE TRANSACTION HAS BEEN ESTABLISHED AS EVIDENCED BY THE REGISTERED SALE DEEDS AND LASTLY, THE TEST OF BUSINES S EXPEDIENCY HAS BEEN MET IN THE INSTANT CASE. THEREFORE THE GENUINENES S OF THE TRANSACTIONS AND IT BEING FREE FROM VICE OF ANY DEVICE OF EVASION OF TAX IS RELEVANT CONSIDERATION. THE INTENT AND THE PURPOSE FOR WHICH SECTION 40A(3) HAS BEEN BROUGHT ON THE STATUTE BOOKS HAS BEEN CLEARLY SATISFIED IN THE INSTANT CASE. THEREFORE, BEING A CASE OF GENUINE BUSINES S TRANSACTION, NO DISALLOWANCE IS CALLED FOR BY INVOKING THE PROVISIONS OF SECTION 40A(3) OF THE ACT. FOR THIS, WE PLACE RELIANCE IN THE CASE OF ATTAR SINGH GURMUKH SING VS ITO (1991) 97CTR 251 (SC) AND SMT. HARSHILA CHORDIA VS ITO (2007) 298 ITR 349 (RAJ). ITA 120/JODH/2019 SHRI GAUTAM SHARMA VS DCIT, CENTRAL CIRCLE-2, JODHPUR 12 2.12 IN VIEW OF THE ABOVE DISCUSSIONS AND CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, I DO NOT FIND ANY MERIT FOR THE DISALLOWANCE MADE BY THE AO U/S 40A(3) OF THE ACT. ACCORDINGLY, THE AO IS DIRECTED TO DELETE THE SAME. 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 04/09/2020. SD/- JESK LH 'KEKZ (RAMESH C. SHARMA) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 04/09/2020 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI GAUTAM SHARMA, JODHPUR 2. IZR;FKHZ@ THE RESPONDENT- THE DCIT, CENTRAL CIRCLE-2, JODHPUR 3. VK;DJ VK;QDRVIHY ) @ CIT(A), 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.120/JODH/2019) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR